By Juliet ETEFE
New research by Dr. Bernard Tawiah, a lecturer in Accounting and Finance at the University of the West of England (UWE) – United Kingdom, sheds light on a groundbreaking link between employee satisfaction and stock price informativeness.
The study highlights how employee reviews serve as a valuable indicator for financial markets, providing investors with insights that go beyond traditional financial statements. The research study by Dr. Tawiah and colleagues, measured through reviews from platforms like Glassdoor—correlates with stock price informativeness.
The research reviewed data on almost 300,000 employee reviews from Glassdoor.com for companies in the S&P 500 index during the period 2008 to 2021.
Dr. Tawiah and his colleagues find that companies with higher employee satisfaction tend to have more accurate stock prices, particularly in relation to firm-specific risks.
The study shows that employee reviews contain rich information about a firm’s internal operations and culture, which traditional financial reports might not fully capture.
The findings suggest that investors who pay attention to these reviews can make more informed decisions.
The study further reveals that this effect is stronger in firms that rely heavily on human capital assets. In industries where employees are a critical driver of competitive advantage, such as technology and finance, stock prices become even more sensitive to employee sentiment.
This research carries far-reaching implications for investors and corporate leaders navigating the evolving financial landscape.
With employee-generated data gaining prominence as a non-traditional but highly informative source, investors may increasingly turn to platforms like Glassdoor and Indeed to supplement their analysis of company fundamentals.
By incorporating employee sentiment into their investment decision-making processes, institutional and retail investors alike can gain a richer, more holistic view of a firm’s internal health, operational efficiency, and long-term sustainability.
For corporate leaders, the study highlights the financial benefits of fostering a positive workplace environment. Companies striving for higher market valuation and investor confidence may find that improving employee satisfaction is not just a human resources priority but a critical element of financial strategy.
Dr. Tawiah’s work is part of a growing body of research in sustainability finance, offering valuable insights for both practitioners and academics.
Having presented his research at several international conferences and published in leading finance journals, including the Journal of Banking and Finance, Dr. Tawiah continues to shape the discourse on the intersection of employee well-being and financial markets, further cementing his reputation as a thought leader in the field.
